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TMI Blog2022 (6) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 1961. 2. On the facts and the circumstances of the case and in law, the Hon‟ble CIT(A) has erred in upholding the disallowance of depreciation of Rs.4,14,25,000/@ 25% of Rs.16,57,00,000/on account of alleged excess capitalization of the value of Safe Cable network, since the correct amount being Rs. 13,51,97.627/- (in lieu of Rs. 16.57,00,000/-) already stands deducted from the gross block of Plant and Machinery in AY 2006-07, being the year in which the alleged excess capitalization was discovered, thus resulting into double disallowance. 3. Without prejudice to Ground No 2 above, the Hon"ble CIT(A) has erred in upholding the excess disallowance of depreciation amounting to Rs.76,25,593/-. as computed on the alleged excess capitalization of Rs.16,57,00.000/- instead of the correct value being Rs.13,51,97,627/-. 4. On the facts and the circumstances of the case and in law, the Hon‟ble CIT(A) has erred in upholding the disallowance of deduction to the extent of Rs.15,00,000/- u/s 35D of the Act. 5. The Hon‟ble CIT(A) was not justified in upholding the levy of interest of Rs.2,57,20,271/- under Section 234D of the Income Tax Act. 1961 by the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed on the reduced written down value of assets. During the course of assessment for A.Y. 2006-07 the assessee further explained that it had capitalized a sum of Rs.2,36,82,10,028/- being the value of SAFE under sea cable during the F.Y. 2002-03 and the same was put to use during the F.Y. 2002-03. During F.Y. 2005-06 it was transpired that a small portion of the liability amounting to Rs.13,51,97,627/- was no more payable and accordingly, the same had been reversed/capitalized by reducing the same from the block of plant & machinery as at April 1st, 2005, although in the interim period viz. during F.Y. 2002-03, 2003-04 & 2004-05, depreciation amounting to Rs.7,81,61,128/- was claimed as per the provisions of Sec. 32 of the Act. It was further explained that instead of reducing the written down value amounting to Rs.5,70,36,499/- as on April 1st, 2005 along with depreciation amouting to Rs.7,81,61,128/- separately from the written down value of the block of plant & machinery, the entire excess liability of Rs.13,51,97,627/- was reduced from the value of the block of the plant & machinery as at April 1st, 2005. 3. However, on the basis of submission made by the assessee during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial pronouncements in support of his contention discussed in para 5 of this oder. The ld. Counsel has also explained that amount of liability of Rs.13,51,97,627/- was arisen in assessment year 2006-07 not in A.Y. 2003-04. On the other hand, the ld. D.R has supported the order of ld. CIT(A). 5. Heard both the sides and perused the material on record. The assessee is a domestic company engaged in domestic & international communication business. The case of the assessee was assessed u/s 143(3) of the Act for A.Y. 2003-04. During the course of assessment proceedings the assessee has explained with supporting document placed in the paper book from page No. 122 to 135 comprising copies of construction and maintenance agreement in respect of SAFE cable system that its share of investment was determined at Rs.2,36,82,10,028/-. During the course of assessment the A.O. vide notice u/s 142(1) of the Act dated 25.11.2015 specifically asked the assessee to furnish the detail of SAFE cable expenditure consisting of four parts of expenses totaling to Rs.2,36,82,10,028/-. The A.O has also asked the assessee to give detail of SAFE cable expenditure amounting to Rs.Rs.2,19,82,05,648/- vide se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner should be satisfied on the reasons that the Assessing Officer has recorded that it is a fit case for the issue of such notice. The reasons should be before the Commissioner before he expresses his satisfaction by according the sanction. In this case, the reasons is date 05/09/2017 and the sanction letter which reads ".... I hereby convey the approval for reopening the assessment" is dated 22/08/2017 and according to the Assessing Officer who has also filed the Affidavit-in-Reply, the approval was obtained in accordance with administrative procedure followed while obtaining sanction for re-assessment. According to Assessing Officer, firstly, a proposal is submitted to the Principal CIT/AddI.CIT in the prescribed format with the draft reasons for re-opening. Then approval is obtained from Principal CIT/Addl.CIT and thereafter the reasons as approved by the Principal CIT/Addl.CIT are recorded. Eventually, the notice under Section 148 is issued. In our view, this is a flawed procedure being adopted. The procedure being adopted is contrary to Section 151 under which the sanction has to be granted for issuing a notice under Section 148 when the Principal CIT/Addl.CIT is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere assessee filed details regarding claim of depreciation on goodwill in original assessment proceedings and A.O after considering same, allowed said claim, initiation of reassessment to disallow depreciation was nothing but change of opinion. With the assistance of the ld. Representative we have also gone through the copy of reason recorded for issuing notice u/s 148 of the Act. It is noticed that in the form for reopening the assessment for initiating proceeding u/s 147 approval of commissions of Income Tax was obtained on 29.03.2010, however, the reason for belief that income has escaped assessment were recorded on 30.03.2010 after obtaining the approval for issuing of notice u/s 148 of the Act. Therefore, after taking into consideration the aforesaid facts and the judicial pronouncement as discussed above in this order we consider that initiation of proceeding u/s 147of the Act in the case of the assessee is not valid, therefore, we quash the issuing of notice u/s 148 of the Act. Since, we have set aside the proceeding u/s 147, therefore, other ground of appeal of the assessee not required any adjudication. Accordingly, appeal of the assessee is allowed. ITA No. 5185/Mum/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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